DENVER – The number of homes in the Denver metro continue to sell at an unprecedented rate as homebuyers and investors engage in bidding wars to find the perfect property, and that’s not taking into consideration the area’s summer real estate market.
Real estate experts, however, say homebuyers shouldn’t give up hope just yet as they predict an inflection point is soon coming which will eventually mean more longer lasting homes on the market, more listings, and maybe less competition.
Denver7 sat down with Jeff Tucker, a senior economist with Zillow on Thursday, who says homebuyers looking for a home should not only not give up hope, but also consider all their options when house hunting. This interview has been edited for brevity and clarity.
Q: I've always heard if you want a new job that you should make it a second job to find one. Is it a second job finding a house when they're moving off the market so quickly?
Jeff Tucker: That's a good way to put it. It's a lot of hard work to shop for a home right now and to actually make that happen – the typical home in Denver goes pending in just five days. So, in many cases, we're looking at this turnaround of homes getting listed on you know, Wednesday or Thursday, and the seller has accepted an offer typically by Monday or Tuesday.
That means every weekend, really, someone who's in the house hunt right now needs to go out there, tour a fresh crop of homes, probably pre-inspect them so that they're in a position to waive that inspection contingency, and then cross their fingers and hope their offer gets accepted.
It's tiring, it's hard work. And it's emotionally draining for people to kind of get their hopes set on a home and then have them dashed when their offer doesn't get accepted.
Q: Is there a need to lower expectations, especially if renovations are needed?
JT: I think that is part of how to succeed shopping for a home right now, is to expect some of that competitive margin ahead of time.
So if a home is listed for a price that's the absolute top of your budget and you can't pay a penny more, then it may not be worth spending this whole week, you know, working on an offer for that house, while some other ones, maybe in a more affordable part of town, or maybe a smaller size that's comfortably within your price range kind of passes you by. So, there's definitely something to be said for considering all the options that are out there. And … this competition, you really kind of need to expect it at this point, and then adjust accordingly.
I think the other thing people are really having to do is to simply adjust their budget based on rising mortgage rates. If you could afford, say, a $2,000 monthly mortgage payment that does not buy nearly as much house today in April as it did even just two or three months ago. So, talking to your lender, thinking about financing first, thinking about exactly how much home can I afford, is really important for keeping those budget expectations in line with reality.
Q: Are you seeing people move further and further out but still work in a place like Denver?
JT: Yeah, it's kind of a classic tale of “drive till you qualify” and it's become very true during the pandemic – a lot of people have shown a much greater willingness to drive further out and live further out from the central core of a metropolitan area, in the midst of the pandemic, whether that's because they're not engaging with sort of the social aspects and, you know, restaurants and so on of the center city, or in most cases, it's because they may not need to be going to the office, at least, they don't need to be there in their office chairs 9-5, 5-days a week anymore.
So, even if someone has to come to the office, sometimes they're still working in the center of the region, maybe it's not five days a week, and so that really changes the calculus of being able to tolerate that long commute, if it's only a sometimes thing.
Q: This is going to sound weird, but I've taken to Zillow as a doomscrolling device. Like drive by the house, ‘Oh how much do you think that goes for?’ and then look it up and be sad. Do you ever hear that?
JT: We've seen a tremendous increase in traffic on our site and our app over the course of the pandemic and over the course of this hot run of the housing market. A bunch of that is really people who are, you know, searching for a home and like you said, it's now become like a second full-time job to be house hunting.
But I can definitely also say that a bunch of it is just people kind of watching and just kind of awestruck by what's actually happening in the market out there and using it as a way to keep informed. And also, I think, for some people, it really is almost a form of entertainment at this point.
Q: But still, you're saying hold on to hope.
JT: We're definitely seeing more homes hitting the market. I can't guarantee that and in fact, I doubt that that's actually going to send prices falling and actually getting more affordable for buyers.
But it definitely means having more options that helps people find the right fit. And I think for sure, we're going to see fewer of these very intense multiple offer situations. As we head further into the spring and even into the summer, the market is going to look a little bit less competitive in the months ahead.
Q: This isn't just happening in Denver though, right?
JT: It is part of a nationwide trend. Denver has really kind of undergone this transition from being a relatively affordable kind of part of the heartland with a bit of a premium because it was near the mountains, you know, maybe 10 or 15 years ago, and has just gone on this trajectory right up into the field of kind of expensive coastal city, and it's one reason that I think it really reflects reality for local folks in Denver to step back and feel like this has been an extraordinary ride on the housing market. That was a really striking kind of transition Denver has gone through and now it's just kind of up there in the league's of very expensive American cities.
What are companies doing to help buyers and sellers in this crazy house market?
Philip Kranefuss, head of real estate for Homie in Colorado says his company is looking to empower both homebuyers and home sellers by making real estate affordable, attainable and equal for all.
His company charges a $3,500 flat fee for the Colorado market for listing services, which he calls “one of the most economical ways to sell your home.”
On the other side of the coin, the company gives a 50% rebate off a commission that buyers can use toward closing costs, rate by downs, prepaids, etc.
“I think there's been a lot of challenges on the buy side and with what's going on right now with the rate hikes and lack of affordability, especially a market that that's pretty heated and competitive like Denver, I think we're starting to see that that's going to have an impact and that is going to slow things down,” Kranefuss said when asked about where he saw the housing market going in the next few months.